Subject Matter Jurisdiction Is Not Subject To Collateral Attack
DEXIA CREDIT LOCAL v. ROGAN (April 26, 2010)
Peter Rogan went to Dexia Credit Local to guarantee the bond repayment for his Edgewater Medical Center. He did not tell Dexia that he was involved in a Medicare and Medicaid fraud scheme. Dexia sued Rogan and obtained a default judgment of over $100 million after Rogan absconded to Canada. Dexia served Rogan's wife Judith with a citation to discover assets and filed an ex parte motion for a Temporary Restraining Order to freeze certain of her assets. Dexia alleged that Judith was helping Rogan conceal his assets. The court granted the TRO and prohibited Judith from transferring certain of Rogan's assets. Judith objected to the TRO on several grounds but the court denied relief, stating that it would consider her arguments at a later hearing on a preliminary injunction. Judith presented evidence at the preliminary injunction hearing -- but later withdrew all of it. The district court granted the preliminary injunction. Judith appealed. During the pendency of the appeal, Judith discovered that complete diversity was absent in the original action brought by Dexia against Rogan. She returned to the district court and moved to dismiss the citation. The district court denied - it instead dismissed the non-diverse defendants, concluding that they were not necessary parties.
In their opinion, Chief Judge Easterbrook and Judges Rovner and Sykes affirmed. The Court upheld the jurisdictional ruling on two alternative grounds: a) once a final decision is entered, Judith cannot collaterally attack the lack of subject matter jurisdiction in the district court, and b) Federal Rule of Civil Procedure 21 allows a district court to dismiss non-diverse, unnecessary parties before or after final judgment. On the merits of the preliminary injunction, the Court rejected each of Judith's objections: the order was sufficiently precise in its prohibitions and the court was sufficiently complete in its reasoning to satisfy Rule 65(d), the court's oral recitation of its findings was sufficient to satisfy Rule 52, the injunction was sufficiently tailored to address Judith’s alleged broad misconduct, and the fact that she was not a party to the underlying lawsuit did not prevent the court from entering the injunction.
Michael Rigney practices in the law offices of GVC Ltd. in Chicago. In this blog, he reports on select